In the world of investing, understanding a client’s true needs goes far beyond just listening to what they say. Every investor has two types of needs:

Implicit Needs: These are unspoken desires or anxieties. This require reading between the lines or desires which are not mentioned directly by investors. Precisely, it’s all about, listening not just to what an investor says, but also to what they don't say. There are different ways to unwind implicit needs like

  • Asking open-ended questions (“What worries you most about this investment?”)
  • Active listening (focusing on tone, hesitation, or repetition) 
  • Observing nonverbal signals to help uncover these underlying needs.

Explicit Needs: These are stated openly, with details, leaving no room for interpretation like, “I want a 10% return,” or “I’d like a monthly income of ₹50,000.” Those who understand these needs of investors can help in directly addressing them with solution the investor is truly looking for. Risk assessment questionnaires and asset allocation usually address explicit needs.

A Mahabharat Analogy – Tailored Solution 

We all know that Krishna had two childhood friends, one was Sudama, who was a poor priest, and the other one was Arjun, who came from a wealthy background.

Once, Sudama was desperate for wealth and went to Dwarka to meet his old friend. Upon reaching, he felt embarrassed to ask for anything from Krishna. But Krishna sensed it, and by the time Sudama reached home, his house was overflowing with wealth. 

Another friend, Arjun who had to fight a great war against his cousins. Just before the fight, he lost his nerves. The thought of killing his own relatives horrified him. When Krishna narrated him the verse of Bhagavad Gita, Arjuns core issues were addressed, his mind cleared, doubts resolved enabling him to raise his bow and fight the enemy with conviction.

Neither Sudama nor Arjuna were explicit about what they wanted. But Krishna sensed what they needed. Each friend needed a tailored response to their implicit need. A mismatch would have failed. It is same as “Wealth to Sudama and Wisdom to Arjun”. Imagine what would have happened if Krishna had sung the Bhagavad Gita to Sudama or gave wealth to Arjun! It would have a disastrous outcome.
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Need based Profiling:

It is important to understand, what kind of solutions would suit investor’s behaviour. A one-size-fits-all portfolio fails. Every investor is unique.

Hence, it is important to conduct Investor Profiling, Risk Assessment and Asset Allocation based on both Implicit and Explicit needs. Happy Investing!